On January 1, Year 4, Goodkey Co. acquired all of the common shares of Jingya. The condensed income statements for the two companies for January, Year 5, were as follows:

	Goodkey			Jingya
Sales	$	11,100,000		$	6,110,000
Gain on sale of equipment					262,000
Other income		910,000			61,000
		12,010,000			6,433,000
Depreciation expense		560,000			191,000
Other expenses		6,710,000			4,410,000
Income tax expense		2,013,000			549,600
		9,283,000			5,150,600
Net income	$	2,727,000		$	1,282,400

The following transactions occurred in January, Year 5, and are properly reflected in the income statements above:

On January 1, Year 5, Jingya sold equipment to Goodkey for $1,110,000 and reported a gain of $262,000. On this date, the equipment had a remaining useful life of four years.

On January 31, Year 5, Jingya paid a dividend of $710,000.

Goodkey uses the cost method to account for its investment in Jingya. Both companies pay income tax at the rate of 40%.